OMG Has Advertiser's Interest At Heart Says Omnicom's Donahue

AdExchanger.com: From your agency perspective, what trends are you seeing in the marketplace?

JD: Digital up, TV down.

I think we're in a position where the economy is causing everyone to seize up their budgets. What's going to be interesting is not what's going to happen in this year on the agency-side – it will be all about what happens on the client-side. As marketers go to the CEO and ask for their budget back a year from now, the CEO is going to say, "Show me what I'm going to get for it." And, that's where the role of the agency will get very, very different.

So, the big trends we're seeing are people are continuing to cut budgets and digital is continuing to grow because it's a measurable platform. I think digital will lend itself to not being a media type but more of a platform as we look to digitize other media types in the next year to 3 years primarily because advertisers are going to demand it in order to get their budgets back.

There's a sense these days that digital needs to fit in with the traditional models of attribution, audience and buying. Does digital media need to embrace reach, frequency and GRPs in order to receive a larger slice of the overall media pie?

Digital can benefit greatly from being reach based. Everywhere we look we're looking at – from the point of segmentation, MRI segmentation, to whatever part of the process – everything is reach based. Digital does need to embrace it. But does digital need to move toward a TV model? No.

No GRPs, then?

You could translate them, but they're not equivalent. But there's nothing wrong with different currencies. The more trading currencies, the more opportunity. To shift the TV GRP methodology to digital is, frankly, a bit silly… it's a completely different experience.

For example, with Hulu, TV.com and experiences where you're sitting and passively engaging on your couch and you're watching, it's engaging you through your heart more than your mind. This is a completely different experience from "I'm clicking on the news and there's something intruding into my experience."

When do brand awareness dollars come online and get a larger slice of the media pie?

When the experience is comparable. For me, I'm someone with a computer science degree, grew up in the age of the Internet and, effectively, grew up a very digital child. I was very active in computer security and the data warehousing community and landed in the agency world on a whim and I could tell, not being a marketer, that my experience on TV versus my experience trolling Slashdot and CNN and other places I go are very different. Giving me the ability to consume content the way TV allows me to consume content will ultimately come to digital as it continues to embrace video. We just have to figure out how to get more and more premium content - such as the new episode of show X is going to be on there and people are going to watch it.
Do brand awareness campaigns work in standard IAB-sized display advertising?

I think so. Generally speaking, a rich media unit will work more for an awareness campaign whereas a standard leaderboard, etc., will work great for a CPA or bottom of the funnel campaign. I think there are places for it. But again, we're talking about someone passively engaging with the media to consume content when they're in a passive or passion-driven state versus active (think "clicking" and "surfing"). Digital needs to prove itself in that "passive" light and the content and experience need to get better. It requires a more passive role from the consumer. When I'm watching TV, I'm open. It's clear in my mind. TV still has the top notch ROI.

So when will awareness campaigns roll into digital? When the experience is up to par. It's experiential.

What are your thoughts on current attribution models in the digital space?

Anyone who has an attribution that is strictly in the digital space is not acknowledging or focusing on the whole picture.

I was on a panel recently about digital analytics – to me that makes no sense. How are you going to do analytics without non-digital channels? It doesn't make sense. The fact that we grew up in a world where the traditional media folks were afraid of digital because it was technology-focused – led to it being run by the "the valley" and not the TV networks, it landed as a separate practice. It shouldn't be.

Anyone who has a separate digital analytics practice that is ignorant to the other media activities doesn't really get it. There are specific analytics you need to do within digital on an optimization basis, and that's really digital operations, to insure you're doing it right in digital optimization. But, analytics without considering what else is going on across media channels is short sighted.

Who's doing it "right" currently with attribution?

Outside of us? I don't know. Just kidding, but I really don't know. We have clients that are doing some amazing work in the space but I am not privy to release more information on that matter

So, your attribution models and metrics are a homegrown product? Is that the way it has to be done?

Yes. There is potential to do it on an industry or categorical basis because the way consumers engage with products is going to align like that. But, there are also massive differences within any category. For example, the way a consumer engages with telecom is much different than computers even though it's all "high tech."

I don't think there's an opportunity to create the ultimate attribution model, primarily because it doesn't exist. You're trying to attribute based on consumer behavioral which changes based on what you're offering the consumer - who has very different buying habits from person to person. A Toyota customer is going to ask different questions than a Chrysler customer, for example.

What's occurred is that agencies let ad networks go out and cobble together readily accessible inventory – and I'm speaking about the ones that primarily buy remnant and not "long tail" where they're actually performing a function that's valuable - and ad networks are/were buying up remnant, and overlaying data and marking it up. And, you're asking me why agencies (us) are trying to create our own solution? I think it's pretty clear. That's not a "cool" model. Effectively, the value they're providing is something we can get done with technology plays.

So whether it's Omnicom Digital's CEO Matt Spiegel announcing our solution or it's the WPP, VivaKi or Havas solution, it's necessary to have a platform because we (agencies) are going to be able to do it better than shifting off the yield management to ad networks primarily because when we're focusing on increasing yield we're doing it with our advertiser's interest at heart. The publisher, or for that matter, the ad network are doing it with their margin at heart. That's the best model for the advertiser. If there's a 40% margin existing in ad networks on average, then I (the agency) should be able to perform that much better than an ad network doing it themselves.

So, these platforms are all about ad networks? Where do ad exchanges fit in here? What's your view on ad exchanges?

Ad exchanges are ultimately valuable if you're buying direct inventory. I'm not a big fan of buying re-packaged inventory on ad exchanges from the networks.

I think data-driven buying is extremely valuable. Being able to list a piece of inventory and slice it by a series of DNA attributes is ultimately of value to me because I should understand what DNA attributes are impacting an advertiser.

It's necessary for agencies to embrace exchanges, but we're still in the area of inventory scale and quality not being up to par. But, in the same token, there's opportunity for us to do well for our advertisers and embrace it. There's definitely a place for exchanges.
What are your views on demand-side optimization and real-time bidding (RTB)?

That would be awesome.

So RTB is my dream world in that it allows me to ride micro-trends, eliminate waste and it gives me opportunity. If agencies get it right, RTB will allow us to solely control yield because we'll have an actual understanding of what is going on. I think agencies are terribly smart and have learned from the past and what happens when you don't control yield.

The challenge for the agencies will be the people. If you look at the standard agency model, it's marketing people creating technology plays. The marketing strategists should focus on what they do best…strategy. The fact that digital is not run by technology people in the agencies is a little odd to me. It's a technology play. Understanding how we can leverage RTB, for example, will depend on leadership and real-time bidding will force that card meaning it's not all about experience, it's becoming important to understand the technology.

Any players in the world of exchanges with RTB that has your "eye"?

One of the things Omnicom Media Group prides itself on is neutrality. We're going to stay completely agnostic.

I'm just trying to get your sense of the current market of exchanges with RTB.

RTB is still in the womb. It's not really there, yet. I think there are opportunities to do it, but not at scale right now. RTB will be a great enhancement to ad exchanges. One of the biggest things I'm worried about right now with ad exchanges is that ad networks become data networks - primarily where people are repackaging information and marking it up for agencies to act against in. One of the biggest things I'm worried about right now is ensuring that we don't empower someone who has effectively shifted the ad network model to a data network model since they smell that the ad network model has fallen off.

What is Omnicom doing about its own platform?

If you look at the Behavioral Insider article on June 24, our CEO, Matt Spiegel, was clear that we're engaging in a platform. We haven't as of yet gone out and made an acquisition of any sort of technology play. For now we remain neutral and will have the advertiser's interest at heart as opposed to some sort of technology driven arbitrage opportunity. We could go out and buy technology today, but it might be second-tier technology tomorrow and that would be an awful situation for our advertisers. We're looking to embrace technology, create platforms and focus on the service business.

Let's talk about addressable media. Is it all about audience these days and placement doesn't matter?

Oh, that's rubbish. It's about the right target, the right place, the right message, in the right context.

It's plain wrong to think it's black or white – for example, behavioral targeting or contextual – that's insane. It's about having all the targeting options together, and this will show the best results. Audience is important and we're setting up deals to capitalize on audience data that is out there across a wide range of providers – again with a neutral approach. But, it's not solely about audience.

What tips do you have for those just getting started in the media agency business so that they can build a successful career?

It's critical to understand the role of technology and operational strategy. However, it's important to understand that media is the ultimate platform to understand how consumers are engaging, and re-empower the conversation with the marketer. Strategy is always king.

Any roles that might give them the right experience?

It's cross-media-type roles – digital, non-digital. Also, multi-national roles that provide understanding of international media buying such as buying cost per day in China.

They should build a data practice – understand how to view information and gain insight from it. But, don't get caught up in data for data's sake. Understand technology, as I said. And, understand every step of the strategy and planning process.

3 Comments

Great interview, very insightful and thoughtful but I disagree with your answer to the demand platform question.

1. Thinking that an agency can provide the same level of results as an ad network via a technology play is very short sighted. Value creation extends far greater than just having a platform. It is about effective supply chain led by an optimal combination of people, process, and technology. The value is in the execution, it will be interesting to see what happens when agencies realize they cant effectively operate an ad network b/c they just dont have the DNA to do so.

2. if you think the 40% margin is not being justified in most cases then how about the 15% you are taking from the client? Arguably, there is disproportionately more value being created by the networks who take 40% than the agency who takes 15%.